Harbor Associates JV pays $42m for commercial office portfolio in San Bernardino
Harbor Associates, in a joint venture with Taconic Capital Advisors, has closed on a $41.7 million off-market acquisition of a five-building commercial office portfolio in San Bernardino, Calif.
Totaling 368,000 square feet, the five assets are located in the Tri City Corporate Center, a 153-acre, master-planned, mixed-use office park with 1 million square feet of commercial office and 390,000 square feet of retail space.
Tri City Corporate Center, which was developed in several phases between 1986 through 2008, also offers lush landscaped setbacks and green belts, wide streets, distinctive project signage, and extensive public art.
The portfolio benefits from its visibility, accessibility and transit-oriented location. The development fronts the San Bernardino (I-10) Freeway and is strategically located one mile from the Riverside (I-215) Freeway.
The portfolio, which is collectively 55 percent let to 28 different tenants, represents the only block of contiguous office space of more than 75,000 square feet in the Inland Empire. The commercial office vacancy rate in the Inland Empire has been dropping dramatically and currently stands at 8.6 percent, lower than Los Angeles, Orange County and San Diego.
“The Inland Empire has a pretty dramatic supply/demand imbalance of large contiguous blocks of space,” said Paul Miszkowicz, principal at Harbor. “Moreover, the market hasn’t seen any new office construction since 2009 in an environment where vacancy has dropped from 21.2 percent to 8.6 percent over the last six years. We think there’s unmet demand in this space and look forward to executing on our lease-up strategy.”
Harbor plans to re-position and lease-up the assets through a renovation program across the portfolio that includes upgraded building entries and lobby experiences, elevator improvements, new roofs, and replacement of the original HVAC units. The portfolio will debut rent-ready spec suites, EV charging stations, LED lighting retrofit along with new building and project signage.
“Our plan is to breathe fresh energy and reintroduce the renovated projects to the tenant and brokerage communities,” added Brad Johnson, vice president at Harbor. “Our focus is on meeting our tenants’ real estate objectives and delivering efficient solutions in a class-A master-planned environment.”
The joint venture is the first between Harbor and Taconic. The buy is Harbor’s 23rd value-add office acquisition in the last five years and expands the company’s Southern California office portfolio to 19 projects totaling more than 2.4 million square feet, according to Justin Loiacono, principal at Harbor.
“We intend on building on our recent momentum by sourcing new opportunities and pursuing similar strategies in the Inland Empire office markets with interesting demand drivers with the goal of acquiring $250 million over the next 12 months,” said Loiacono. “We have a robust pipeline of activity behind this transaction and look forward to continuing to build our Southern California portfolio.”
